SMARTPHONES: Oppo Lands in India Protest Storm

Bottom line: A mass protest against Oppo in
India over a Chinese manager's desecration of the national flag
won't impact the company beyond a week or two, and reflects
cultural sensitivity issues Chinese firms will face as they expand
abroad.

Oppo under fire in India

Smartphone high-flyer Oppo is quickly learning the
road to India isn't always so smooth, with word of a mass protest
at the company's local operation due to a controversy involving
desecration of the Indian flag. In this case the company appears to
be learning a fast lesson in cultural sensitivity, which
underscores one of the more subtle lessons that Chinese firms will
need to learn as they expand abroad.

I doubt this particular incident will have any long-lasting impact
on Oppo, though it will be interesting to see if it might affect
its recent major cricket sponsorship deal in India. (previous post) The incident could also make Oppo think
twice about its other big plans for the market, namely the building
of a major production base there.

We'll return to the bigger picture shortly, but first let's look at
the latest protests that apparently had their roots in an incident
that happened at Oppo's office in the Indian capital. The reports
are a bit unclear, but the one thing that does seem certain is that
a Chinese manager at the facility ended up throwing an Indian flag
into the trash can as the result of something that happened at the
office. (Chinese article)

Oppo appears to be saying the manager threw the flag into the trash
because it was on a seat that he was trying to clear to make space
for a local employee. Perhaps that was the case, though that's only
Oppo's explanation. Whatever the reason, the action didn't sit well
with the employee and possibly others nearby, who saw the action as
highly disrespectful.

As a result, hundreds of employees began to demonstrate against the
company outside its New Delhi offices. A photo of the demonstration
certainly looks like the number was at least several hundred
people, many waving Indian flags in protest. Oppo's statement
detailing the incident says the Chinese manager at the heart of the
incident has been disciplined, but doesn't say much else.

I expect the incident has probably died down by now, but images and
reports of the protests certainly won't help Oppo's sales at the
moment. This particular incident looks somewhat like protests that
broke out against Chinese companies in Vietnam a few years ago. But
that particular incident had a strongly political angle and was
fanned by Hanoi over a territorial dispute between China and
Vietnam.

By comparison, this time the root of the incident seems to be
purely due to Oppo's own behavior and lack of cultural sensitivity.
I do have to applaud the company for trying to be transparent about
what happened, and also for disciplining this culturally
insensitive manager. Whatever the case, the manager clearly should
have shown more respect towards the Indian flag in his handling of
the situation.

Cultural Sensitivity Gap

China is by no means the only country where managers may require a
little more cultural sensitivity training. Managers from major
western firms probably learned similar lessons back in the 1970s
and '80s, when many companies first started expanding abroad and
discovered the need to respect local cultures and customs. The
difference here is that most Chinese companies have really only
started going out in the last decade, and are still learning this
kind of lesson.

Before all this happened, Oppo was one of China's fastest-rising
smartphone brands, taking the title for top seller in its home
market and also rapidly rising in India. In last year's fourth
quarter, the company was the fourth biggest brand in India and
climbing fast. It's committed at least $360 million to the market
in the last few months alone, including $160 million to sponsor the
country's national cricket team a few weeks ago (previous post) and another $200 million to build an
Indian production base.

All of that brings us back to the question of what impact, if any,
will this incident have on any of Oppo's development plans in
India. I suspect there may be one or two calls for the cricket team
to scrap the recent sponsorship deal that will be quietly ignored,
and that Oppo's sales may suffer for a week or two until all this
blows over.

But the incident should have relatively little impact past a week
or two, at which point things will probably return to normal as
both the company and local officials try to put the matter behind
them. Oppo should also be lauded for handling the matter in a far
more transparent and professional way than we probably would have
seen from Chinese companies going abroad several years ago.